This High-Yield Portfolio Will Beat the Market
Forty-nine weeks ago, I invested my cold, hard cash into 10 high-yield dividend stocks I believe will beat the market. Let's see the results so far:
Company | Average Cost | Shares | Recent Price | Total Value | Return |
|---|---|---|---|---|---|
Altria (NYS: MO) | $24.86 | 40 | $28.83 | $1,153.10 | 15.96% |
Philip Morris (NYS: PM) | $61.83 | 17 | $76.83 | $1,306.11 | 23.30% |
National Grid | $45.63 | 22 | $48.81 | $1,073.82 | 6.97% |
Annaly Capital Management (NYS: NLY) | $17.55 | 57 | $16.89 | $962.45 | (3.79%) |
Frontier Communications (NYS: FTR) | $8.71 | 149 | $4.68 | $697.62 | (46.25%) |
Southern Co. | $37.87 | 26 | $45.29 | $1,177.65 | 19.60% |
France Telecom | $22.23 | 45 | $15.19 | $683.55 | (31.67%) |
Vodafone Group (NYS: VOD) | $28.69 | 38 | $27.48 | $1,044.24 | (4.22%) |
Eli Lilly | $34.48 | 29 | $39.94 | $1,158.12 | 15.82% |
Bristol-Myers Squibb | $25.37 | 39 | $32.72 | $1,275.89 | 28.95% |
Cash | 128.06 | 128.06 | 0% | ||
Dividends Receivable | 32.49 | 32.49 | 0% | ||
Total Portfolio | $10,693.08 | 6.93% | |||
Investment in SPY | 2.60% | ||||
Return vs. SPY | +4.33 |
Source: S&P Capital IQ, as of Jan 26.
Since my last report, the SPDR S&P 500 rose 2.6%. Our portfolio rose less than the market, with our outperformance moving from beating the market by 4.74 percentage points to a 4.33-point advantage. While outperformance is always good, it should be taken with a grain of salt. We're investing for the long term, and it's only been 11 months.
Movers and shakers
Our largest mover the past week was Frontier Communications, which fell 3.35%. Frontier has been falling with the telecom sector as Verizon and AT&T both reported disappointing earnings.
Money!
There are four upcoming dividends for the portfolio:
Annaly Capital Management will pay a $0.57 dividend today. The ex-dividend date was Dec. 26.
Vodafone will pay a dividend of 0.705 pence (roughly $1.12, not included in Dividends Receivable as exchange rate won't be determined until close of market today) on Feb. 3. The ex-dividend date was Nov. 16.
Southern Co. will pay a $0.4725 dividend on March 6. The ex-dividend date is Feb. 2.
Eli Lilly will pay a dividend of $0.49 on March 9. The ex-dividend date is Feb. 13.
Reinvestment
With the dividends from Annaly and Vodafone, by Feb. 3 we will have just over $200 in cash in our portfolio. As I said last week, I'm partial to investing in Annaly, Vodafone, France Telecom, or Philip Morris.
There was big news yesterday when the Fed announced it will keep low interest rates until late 2014, extending by a year its promise to keep low rates. That's great news for Annaly, which makes money by borrowing money at low rates to invest in mortgage-backed securities. The news from the Fed gives Annaly a leg up on our other options to invest in; however, we will continue to evaluate options as we wait to collect our dividends from Annaly and Vodafone.
My Foolish bottom line
I'm highly confident in this portfolio's ability to crush the market over the next decade, and that's why I put $10,000 of my personal cash into these stocks. My strategy is simple. I'm buying strong companies with outsized dividends, reinvesting those dividends, and holding them for the long run. Over the coming year, I'll track my performance, update you on when I'm going to reinvest all my dividends, and keep you abreast of news affecting these companies.
Consider the 10 tickers above along with the 11 names from a brand-new free report from Motley Fool expert analysts called "11 Rock-Solid Dividend Stocks." To get instant access to the names of these 11 dividend stocks, click here -- it's free.
At the time thisarticle was published Dan Dzombak can be found on his Facebook page. Click here and like my Facebook page to follow my investing articles. He owns shares of Altria, Philip Morris, National Grid, Annaly Capital, Frontier, Southern Co., France Telecom, Vodafone, Eli Lilly, and Bristol-Myers Squibb.The Motley Fool owns shares of Altria Group, Philip Morris International, and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Southern, France Telecom, Philip Morris International, Vodafone Group, and National Grid. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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